IoT meets Insurance, and how the world will change, with what I predict one of the fastest adoption curves, and a shared ecosystem of benefits for all stakeholders.

1.
The Future of the Connected Car and
the User Based Insurance (UBI).
How the Internet of Things (IoT) is changing the
world: Gartner says that IoT installed base will grow
to 26B units by 2020 for a value estimated of 3.8
trillion USD forming a new era.
Let us focus on the connected car, and the benefits
leading to User Based Insurance (aka UBI).

2. Overall the benefits & the value:
In the B2C arena, the shift is mainly represented by:

3. In the B2B arena, the shift is mainly represented by:
However it is not about building a device per se, it is
connecting with the hearts and minds of next billion

4. of customers, whilst fostering a deeper loyal
relationship with them.

5. How do we build this connection and develop a
loyal deeper relationship with the next billion of
customers?
There are 4 plays in the new era:
1. Build Information as a service (the data
play)
2. Bundle Play
3. Pay as you Go (dynamic pricing play)
4. Loyalty Play
1. Information (data) play must provide benefits
to its intended stakeholders recipients, always
centered around the end user (the customer) whilst
offering a mutually beneficial value exchange,
taking advantage of a more frequent contact
opportunity to collect behavioral data and in return
provides:

6. To the consumers (policy holders):
1. A better service offering, which ultimately in the
User Based Insurance (UBI) case translates
into:
a. A fairer dynamic pricing tailored to the
needs and the behavior of the end user;
b. A saving opportunity on the policy
premium, disrupting the existing motor
insurance colluded market, which takes
advantage of one tariff floor.
c. Value added services based on the data
collected, and that go beyond what current
insurers provide.

7. To the Insurers:
1. An increase in clients` acquisition & demand
generation in a cluttered market with no
differentiation.
2. An increase in Brand equity through unique
positioning (whether as pioneers and/or as
technology and lifestyle provider of insurance
services that make the policy tangible and
provide end user benefits that save lives). That
will have a halo brand effect also on the other
products and services offered extended to the
vanilla products and beyond motor insurance
strict policies.
3. A concrete differentiation of their value
proposition to all stakeholders of the motor
insurance value chain.
4. An increase in actuarial accuracy and better
risk management, which translate in higher
underwriting margins, especially in an industry
where every base point counts.
5. An increase in claims services and
administration efficiencies, which benefits both
brand preference and end user value as well as
margins.
To our society:
1. Incentive to motorist to adopt safer driving
habits, ultimately increasing road safety and
security.
2. Traffic alleviation
3. Long term behavioral shift that reduces
accidents, therefore injuries and fatalities
4. Fuel consumption reduction, and carbon
emission curtailment.

8. 2. The Connected Car of the future, and the
benefits Bundle Play with embedded telematics
devices, smartphones apps, which are activated
automatically in proximity of the device and
trigger automated responses and services to
save lives and improve efficiencies in case of
severe accidents, and likelihood of injuries.

10. The above illustrations are a concrete examples of
end users benefits, features & services provided by
the bundle play, which only an embedded device
can really provide & offer (especially in the UBI
arena).
3. Pay as you Go (dynamic pricing play)
This is the major disruption benefitting the end
users in the UBI example (the policy holders),
which obtain both a saving opportunity based on
the number of kilometers driven, and cash-flow
value with a dynamic pricing billed bi-monthly (for
instance) based on the actual number of Km driven.
Exactly as you pay today your utility bills, and the
behavior slightly improves as the reporting, the
visual dashboard on the mobile Apps provide the
end users with real-time data on their behavior,
driving profiles, and forecast the cost of their actual
driving Vs. estimated.

11. This is also an opportunity over time to tailored
pricing and services to each end user (policy holder)
needs and wants, with the only accurate and safe
possible solution centered around the customer.

13. 4. Loyalty Play
Insurers and service providers will see an increase
in loyalty and persistency ratios in their customer
basis, as well as new demand generation if the
pioneer the market.
Specifically for the Thai motor insurance market,
where the persistency ratio is circa 66%, the

14. improvements through telematics/UBI are
estimated in the range between 14% and 32%.
Conclusions:

17. How does UBI work?
Additional Information:

21. credits to a various Insurers, Service Providers, research
Companies and illustrators who developed the infographics.
You can find them all in my Pinterest board "the connected car" @
http://www.pinterest.com/montesantigio/the-connected-car/